General Motors went public at $33/share today, generated huge trading volume (452m shares traded) and ended the day at $34.19. Automotive News [sub] reports that the government stake in GM “could” be as low as 33 percent post-IPO. Only five percent went to “large foreign investors,” including one percent to the Chinese bête noir SIAC, which hinted at future cooperation with The General on “exploration of overseas markets.” The only bad news? Had the Treasury sold its entire stake at the closing price today, it would have been down $9b. Now GM’s stock price needs to hit $48.58 before taxpayers make good on their investment. But with a market capitalization of about $63b, GM is at least worth more than the taxpayers put into it. Which, using a variation of Project Car Hell logic, is a real accomplishment.
Which, using a variation of Project Car Hell logic, is a real accomplishment.
Oh, now it makes sense! That’s how the government should have sold the idea to us! Like we were a pissed off spouse and they were trying to explain the old Jaguar sitting in the drive.
To properly interpret charts like this they need to be adjusted for inflation. Adjusted, GM’s stock price in 1965 was $377. And that “high” of $93 in 2000 is $72 in today’s money. And the reference in the chart text to prices being “at levels not seen since the mid fifties” is also misleading, since that $20 price in 1954 is $160 adjusted.
you are not adjusting for number of shares though. it is tough to say when it was really worth most unless we know the float for all those periods.
In other words- smoke and mirrors. Welcome to the (new) GM!
GM’s turnaround is certainly incomplete, but today was clearly an important milestone. The restructured company is profitable, has good positions in some major growth markets and has stabilized market share in North America. A broad swath of investors around the world want in on the action. So far, so good.
+1
They’ve also removed the blue Mark of Excellence from its former prominence. From the website to the Wall Street banners to the Wikipedia page; it’s been replaced by a simple logotype. Too much baggage, I presume.
And several hundred thousand jobs have been saved, at least for now…much better use of my tax dollars than the wars of choice.
….and retiree benefits.
Seriously. These billions represent a month or two in each of the wars that have gone on for over a decade. At least they bought me something other than dead people.
The govt could have chosen to not engage in those wars and not bail out GM, the two were not bundled together or a ‘please select Door 1 or Door 2’ choice as you imply.
You can rationalize just about any govt market intervention if you contrast its cost against a large scale military operation.
Not “bête noir”, but “bête noire”.
As to the graph, NYT would have been better to have used an inflation-adjusted market capitalization figure.
btw, IIRC, the bête noire cited above is not “SIAC”, but rather “SAIC”…
Lower Middle Class Financial Analysis: A select group of already wealthy individuals will get even wealthier. The outlook for the rest of us: hosed again.
The price didn’t move that much. If you can buy some now, it is pretty much the price as the IPO.
If you think that the wealthy are going to get even wealthier on GM stock, then buy in yourself. You can buy shares for less than the price of a tank of gas each.
Depending on how many major pension funds and mutual funds buy new GM stock, you may become an investor at some point albeit at a fractional level.
Even if the stock price hit that $48.58 number-the gov’t wouldn’t/couldn’t just dump all its shares like us commoners on ETrade.
Doing that would probably bring the stock price down considerably-thus pissing off everyone who bought the stock including the union/pension funds.
When do I expect my check?
UAW owns this abomination lock, stock and barrel and I couldn’t be less interested in ever owning a GM product no matter how good it is. Way too many better alternatives available for me to spend my money on.
I’m just angered about the impossibility in this modern era of finding even one bank offering a free toaster when opening a new account.
Yeah, really. I was actually hoping for a foreclosed McMansion with my new BoA account.
I got a free kick-in-the-crotch when I opened a checking account.
This “NEW” GM is most definately trying to forget it’s past. We as GM retirees and employees use Fidelity to service our P.S.P.-personal savings plans. Fidelity used to have several funds to invest in with GM stock. Upon the “NEW” GM’s plan Fidelity no longer services the “NEW” GM’s I.P.O. or any stock dealing. GM chose Morgan Stanley(MSR) so this effectively left all retirees and employees out of using their Fidelity savings plans OUT OF THE I.P.O. without removing, borrowing, or liquidating their funds to purchase stock. I would think GM would want employees and retirees to invest in what we thought was “OUR” company. We as employees and retirees generally(no pun) hold these stocks long term unlike what we saw yesterday with the “NEW” GM’s stock starting at $33. and ending up almost the same at the end of the day with the day trading. I wonder if the other auto manufactuers have similar ploicies?
Workers should not buy stock in their employer’s company.
I wouldn’t go so far as to say that they shouldn’t; just that they shouldn’t buy so much as to un-diversify their portfolio and make its future value too dependent on the one company.
Buying stock in your employer or pension provider is always a bad idea, unless it is offered at substantial discount. Diversify your risk.
I suspect this IPO will make more money for the Wall Streeters who set it up than it will for the new investors, although a company that has Uncle Sam for a sugar daddy is kind of tempting: http://www.thestreet.com/_yahoo/story/10928128/1/dumbest-of-this-weeks-5-dumbest-for-gm-every-day-is-a-tax-free-day.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA
One of the bad things about this whole deal is that GM gets breaks from the government that its competitors don’t. That’s why they call this “crony capitalism”.
It’s not crony capitalism.
Ford Motor, having not gone bankrupt, retains the tax benefits of previous losses carried forward. In order for GM to remain competitive with Ford, it needed to retain these tax benefits too. Rattner fully understood that.
Jim Cramer of TheStreet.com said about GM: “It’s a jobs program—after the recovery it’ll be gone.” Sounds like TheStreet– much like TTAC– is trying to do some ‘splaining.
Barnum’s Law: there’s one every minute.
This is interesting about GM’s operations before the IPO: http://www.bizzyblog.com/2010/11/17/gms-ipo-uncle-sams-pump-and-dump/
I still talk to a lot of people who swear they will never buy a product from Government Motors. I don’t see how GM will gain any market share without paying back the government, which won’t happen in my lifetime.
Another good article about this: http://dailycaller.com/2010/11/18/gm-selling-at-a-loss-should-tell-you-something/